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In 1985, the government of Gambia (GoG) adopted the Economic
Recovery Program(ERP) which, among other things, put an accent on
divestiture and privatization of parastatals. To consolidate the gains in
macroecononomic performance from the ERP, a Program for Sustained
Development(PSD) was launched in 1990 with an emphasis on the development
of the private sector as the engine of growth. However, progress in the
implementation of the reforms has been slowed after the military coup in
July 1994.
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A Privatization Act approved in June 2000, formalizes the establishment of the
Gambia Divestiture Agency (GDA). It also officially declares the opening of
a divestiture account at the central bank, into which revenues from
privatization transactions will be deposited.
The World Bank approved in July 2001 a credit of US$ 15
Million to finance a Capacity
Building for Economic Management Project. The project has a
component dealing with the strengthening of GDA and the improvement of the
regulatory framework.
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Due to the deteriorated financial condition of the PE
sector which accumulated important arrears, the implementation of the
privatization program has been very slow. Restructuring of major PEs and improvement
of the regulatory and legal framework is a condition to the success of the
program.
A major progress has been noted for the National Water
and Electricity Company, NAWEC. The company has been in the past unable to
operate efficiently and to meet the demand. A first lease contract signed
in 1993 with a private operator was
unsuccessful. However, in June 2000, following a competitive process, the
government selected ESKOM, the South Africa's state
electric company to create a joint venture company.
Concerning telecommunications,
the separation of GAMTEL's radio and television activities from the
telecommunications business was decided in April 2000 as a first step
toward the divestiture of the company.
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In June 2001, in its letter of intent and in line with
its interim strategy for poverty alleviation, GoG declared its commitment
to limit accumulation of payment arrears for all public enterprises and to improve
their financial position. Also, before the end of 2001, GoG is expected to
pay its debt to the banks in order to accommodate an increase in private
sector credit. This is will facilitate the privatization of several SOEs.
In 1999, the government seized the property of
the Gambia Groundnut Corporation (GGC), owned by the Swiss company,
Alimenta. The government alleged that the company was laundering money.
However, with the financial assistance of the European Union, the dispute
has been recently settled with the government’s commitment to pay its
arrears to the company. The settlement will contribute to the restoration
of investor confidence, which deteriorated after the seizure. The
divestiture of the processing plants is now in the privatization agenda as
the transfer of the company assets to GDA has been authorized in May 2001.
The divestiture of the Social
Security and Housing Finance Corporation is also being prepared with the
support of the World Bank through the recently approved project.
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- The Gambia
Letter of Intent and Technical Memorandum of Understanding, June 29, 2001
- Gambia Divestiture Agency
- The Republic of The Gambia -- Interim
Strategy for Poverty Alleviation II
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